Gold Regains Ground Amidst Rising US Rates and Ongoing Trade Tensions

Posted Thursday, September 7, 2023 by
Arslan Butt • 1 min read

In a shift from recent trends, GOLD prices broke a consecutive five-day decline, now trading near the $1,920 mark, marking a modest increase of 0.20% during Thursday’s Asian trading hours. Yet, the metal remains encumbered by potential monetary policy shifts, particularly as market participants gauge the likelihood of a 25 basis points interest rate augmentation by the US Federal Reserve by the culmination of 2023.

Anticipations of a more assertive stance by the Federal Reserve in its forthcoming September session continue to buoy US Treasury yields, lending strength to the US Dollar (USD). As of this report, the 10-year US bond yield has seen an uptick, standing at 4.28%, a rise of 0.05%. Concurrently, the US Dollar Index (DXY), which evaluates the USD against six principal currencies, maintains a stance around 104.80.

On the economic front, the US ISM Services PMI surpassed expectations by registering at 54.5 for August, a notable increase from its previous 52.7, and outpacing the anticipated 52.5. Contrastingly, the S&P Global Composite and Services PMIs recorded figures slightly below market predictions, at 50.2 and 50.5, respectively. Such nuanced US economic data trends contribute to buttressing the dollar’s position.

Investor confidence is currently tempered, with the Chinese economic slowdown and persistent US-China trade frictions playing central roles. These dynamics are exerting downward pressure on GOLD valuations. Yet, amidst the prevalent bearish sentiment in equity markets, GOLD might find some reprieve due to its recognized status as a financial safe haven.

Amplifying trade concerns, recent developments in US-China relations could pose challenges for gold’s price trajectory. As reported by Reuters, US Commerce Secretary Gina Raimondo articulated that the tariffs levied on China during the Trump era would remain unchanged, pending a comprehensive assessment by the US Treasury Office.

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